Ottawa could see tens of thousands of hotel rooms vanish by the end of the decade unless tax reforms are enacted, the Hotel Association of Canada told MPs. The lobby group says structural barriers are choking investment in new accommodations and threatening the tourism sector.“By 2030 Canada is expected to face a shortfall of nearly 20,000 hotel rooms which could cost the economy an estimated $5 billion annually,” the association’s report stated, citing regulatory and tax hurdles as the main obstacle to expansion.Blacklock's Reporter said the association called for tax reforms including 100% write-offs on capital costs in the first year of construction and deferred capital gains. The industry has previously benefited from undisclosed pandemic rent and wage subsidies as well as $3.8 million in direct support to the lobby group.According to the report, Capital Outflow in Canada’s Hotel Industry, hotel supply in the United States is growing twice as fast as in Canada due to a more favourable investment climate. Meanwhile, occupancy rates in major Canadian markets remain in the low 70% range, indicating strong demand, but uncompetitive policies are discouraging domestic investment..The association said 179 hotel projects have been abandoned since 2019, including 41 last year alone, representing 6,150 lost rooms and $1 billion in capital spending. Many investors are now considering U.S.-based projects, the report said.The warning comes as part of a Commons industry committee study on productivity. It echoes a 2021 Senate report that predicted mass closures without extensions of Canada Emergency Rent Subsidies and Canada Emergency Wage Subsidies, noting that 70% of operators risked going out of business during pandemic lockdowns.“Because restrictions on domestic and international travel have subdued hotel demand, hoteliers know cutting rates is unlikely to generate demand,” the association said. Former CEO Susie Grynol testified that many operators may never recover from the pandemic, predicting “some carnage” in the sector.
